This Chinese New Year, while folks were lighting firecrackers and stuffing their faces with dumplings, two names were on everyone’s lips: DeepSeek and Ne Zha 2. Ne Zha 2 is the sequel to a wildly popular animated movie, representing China’s booming cultural soft power – though, let’s be real, even soft power in the 21st century is backed by some serious digital tech muscle. But DeepSeek? That’s pure, unadulterated tech hard power. And while the nation was still basking in the glow of these achievements, something unexpected happened. Nanjing, the capital of Jiangsu province and a pretty significant city in its own right, kicked off a very public, very official soul-searching session: “Why couldn’t we have produced a DeepSeek?”
Now, for those of you back home who might be scratching your heads, let me break it down. DeepSeek is a Chinese AI company that, seemingly out of nowhere, dropped a large language model so powerful it’s being whispered about in the same breath as GPT-4. We’re talking serious AI firepower here. And its emergence in Hangzhou, a city already famous for Alibaba and its digital economy, has triggered a wave of introspection across China’s urban landscape.
The Xinhua Daily, the official newspaper of the Jiangsu Provincial Committee of the Communist Party of China, didn’t pull any punches. Its online news platform “Jiaohuidian” fired the first shots, publishing three hard-hitting articles in two days: “Why Did DeepSeek Appear in Hangzhou?”, “Why Didn’t Nanjing Develop ‘Hangzhou’s Six Little Dragons’?”, and the blunt question, “Hangzhou Has DeepSeek, What Does Nanjing Have?”.
But they weren’t done there. A few days later, the Xinhua Daily itself doubled down with a full-page spread titled “’Deep Exploration’ Unleashes a City-Wide Reflection Craze: How Should Cities Get on Board the Roaring AI Era?” This wasn’t just about Nanjing anymore. They broadened the scope, dragging out other powerhouse provinces and cities for a public examination. “The ‘AI Trio’ are all from Guangdong – so why didn’t they start their companies there, instead choosing Hangzhou in Zhejiang?” the article questioned. “Why hasn’t Shenzhen, the so-called ‘Silicon Valley of China’, spawned companies to rival the ‘Hangzhou Six Little Dragons’?” They even resurrected the ghost of the “Shanghai Question” from 2008: “Why didn’t Alibaba develop in Shanghai?”
Let’s be clear, these cities aren’t exactly down and out. They’re economic juggernauts. But there’s a palpable sense of loss here, and Nanjing’s questioning is just the tip of the iceberg. At the same time, as the Xinhua Daily points out, these cities should also feel a sense of privilege in even being able to ask these questions. It implies that they, and the rest of the country, have a certain level of confidence and high expectations for their own innovation capabilities. Many other cities in China probably don’t even have the audacity to ask such questions.
This wave of urban anxiety, sparked by DeepSeek, isn’t just a short-term scramble to see which city can churn out the next AI unicorn. It’s a much deeper, more systemic reflection on the fundamental logic of urban development in China. In this new digital economy, what kind of innovation revolution do Chinese cities need? In this long-distance race of technological innovation, how can cities maintain strategic focus and achieve an ecological leap forward? This isn’t just about bragging rights; it’s about survival in the global tech arena.
Deconstructing the Innovation Myth: From Simply Stacking Elements to Long-Term Chemistry
These cities leading the charge in self-reflection aren’t exactly innovation deserts. In fact, they each boast their own “secret weapons.” What’s remarkable is their willingness to confront their own challenges and shortcomings even amidst their successes. When simply piling up land, capital, and talent starts yielding diminishing returns, what “chemical magic” is needed beyond just throwing more ingredients into the pot?
Let’s look at some of the examples mentioned in the Chinese articles. Hangzhou, for instance, has been iterating its digital economy ecosystem over and over, constantly evolving its industrial landscape. Shenzhen’s Guangming Science City is pushing a “research institution + industry fund + application scenario” three-pronged approach. Dongguan’s Songshan Lake Materials Laboratory is pioneering a “reverse innovation” model, directly embedding market demands into basic research. Suzhou Industrial Park has localized Singapore’s “risk-sharing mechanism.” Guangzhou’s Huangpu District is experimenting with an “entrepreneur-chief scientist” system, bringing industry leaders into tech decision-making. And Wuhan’s Optics Valley (Guanggu) has special support policies for “non-consensus innovation.”
By observing these diverse approaches, the “chemical equation” of urban innovation ecosystems is starting to become clearer. Higher efficiency in resource allocation, better synergy among different players, more tolerant innovation buffer systems, and a more vibrant innovation culture – these are the new moats protecting a city’s innovation prowess. As innovation actors and activities become increasingly diverse, complex, and networked, cities need to shift from top-down, rigid control to bottom-up, rapid-response enablement.
These characteristics are particularly evident in regions with more vibrant private economies. The last wave of consumer internet in the digital economy spawned a bunch of giant, solitary internet companies, like banyan trees standing alone, but it also nurtured a vast pool of digital talent. A city’s innovation actors and its urban governance are like a river and its banks – constantly interacting, colliding, and shaping each other as they flow forward. In this joint surge forward, the soil gets richer and more fertile. All those seemingly serendipitous successes – the “unintended consequences” – require a long-term perspective to understand. The secret isn’t about choosing the right willow branch, but creating soil where many different kinds of willow branches can thrive.
Strategic Focus: More Important Than Chasing the Latest Trend in Urban Innovation
No growth comes without growing pains, and no success is instant. Beijing’s Zhongguancun, China’s original “Silicon Valley,” took thirty years to transform from an electronics market to a hard tech powerhouse, weathering multiple industrial shifts. Wuhan’s Optics Valley stuck to the field of optical fiber communication for twenty years, eventually becoming the world’s largest optical communication industry base. Shenzhen’s metamorphosis from a “processing and assembly” hub to an “innovation capital” involved shedding 75% of its traditional industries. Hangzhou in Zhejiang province has iterated its digital economy policies six times in ten years, from the “No. 1 Project” in 2014 to the “Digital Economy Re-departure” in 2023, maintaining policy continuity and resilience in its digital economy leadership. Hefei, a city in central China, spent heavily to bring in the University of Science and Technology of China (USTC) and build national laboratories, and then for a decade, consistently nurtured new display and quantum information industries. This city used the sustained efforts of three generations of leaders to transform from a “venture capital city” to a “science and innovation hub.” Suzhou Industrial Park has maintained a 15% R&D investment intensity for 25 consecutive years, cultivating a billion-dollar biomedical industry cluster.
The breakthroughs that truly change a city’s destiny often require navigating multiple economic cycles. When urban competition enters a “long-distance innovation race,” the game isn’t about the number of star companies in the short term, but the depth and resilience of the innovation ecosystem. These choices reflect the true wisdom of city leaders in the face of innovation anxiety: maintaining strategic patience in a restless era and upholding long-termism amidst uncertainty. Good values are ultimately rewarded by time. As one of Nanjing’s reflective articles pointed out, what Nanjing needs isn’t anxiety about “missing the boat” on the latest hot trend, but a commitment to “long slopes and thick snow”— a Chinese idiom referring to long-term, compounding value accumulation.
Collective Wisdom to Cure Anxiety
After the 2025 Lunar New Year, major economic provinces and cities like Guangdong, Jiangsu, Zhejiang, and Shanghai successively convened “first meetings of the new year,” setting the tone for the year’s economic work. These meetings included both “slow-burn” strategies like “cultivating a fertile business environment” and “detailed work” such as “using technological innovation as an engine to build a modern industrial system.” Despite different resource endowments and strategic focuses, a common theme emerged: focusing on high-quality development and innovation-driven growth – a case of “great minds think alike.” This collective shift is both a response to the DeepSeek phenomenon and a re-evaluation of urban development paths.
A key focus is highlighting the core position of “technological innovation.” Guangdong proposed “climbing to new heights,” strategically focusing on artificial intelligence and robotics. Jiangsu is aiming to enhance its global science and technology influence by focusing on building “one center, one base, and one hub.” Zhejiang proposed making new breakthroughs in building an innovative Zhejiang and developing new quality productive forces based on local conditions, focusing on two major tasks: comprehensively advancing the reform and development of education, science and technology, and talent, and promoting the deep integration of scientific and technological innovation and industrial innovation. Anhui has focused its “first meeting of the new year” on innovation for four consecutive years, proposing in 2025 to “vigorously promote scientific and technological innovation with extraordinary measures.”
Another common thread is attention to the business environment as an ecological melting pot. Shanghai released its eighth consecutive action plan to optimize the business environment (Version 8.0), emphasizing “enhancing enterprise experience” and reducing institutional transaction costs through digital and intelligent reforms. Liaoning proposed attracting investment with a “fish-in-water” business environment and cracking down on behaviors that undermine the business environment.
Finally, there’s a shared focus on building a modern industrial system and cultivating new quality productive forces. Guangdong proposed “breaking out of the low-to-mid-end and seizing commanding heights,” building new pillar industries in artificial intelligence and robotics. Anhui is using technological innovation to lead the development of new quality productive forces, promoting high-efficiency industrial innovation and future industry layout. Shandong is promoting the conversion of old and new growth drivers through a “mechanism for the integration of technological innovation and industrial innovation.”
Cities are competing and cooperating in consensus, and in this competition and cooperation, they are reshaping the innovation landscape. The Yangtze River Delta G60 Science and Technology Innovation Corridor is breaking down administrative barriers, forming an innovation community where R&D happens in Shanghai, pilot testing in Suzhou, and mass production in Wuhu. The Guangdong-Hong Kong-Macao Greater Bay Area is achieving cross-regional flow of innovation factors through institutional innovations such as “cross-border sharing of research equipment” and “mutual recognition of talent visas.” This deepening of regional collaborative innovation is rewriting the innovation ceiling for individual cities, but also puts institutional wisdom to a greater test. At the same time, even amidst ongoing trade frictions, the pace of many cities and innovation actors integrating into the global innovation network has never stopped. DeepSeek’s innovation and open-source revolution, to some extent, also reveals that in the digital economy era, perhaps we can only move towards the future together by supporting each other.
Conclusion
In this wave of urban anxiety triggered by DeepSeek, the real reflection shouldn’t be on the gains and losses of a few specific entities, but on the generational gap in the entire urban innovation system. When traditional innovation management paradigms encounter the digital technology revolution, cities need to reconstruct their innovation ecosystems with “second curve” thinking: shifting from pursuing linear accumulation of innovation factors to non-linear growth of innovation networks, from emphasizing the limited and certain advantages of policy supply to the inclusive and adaptive advantages of institutional innovation, and from focusing on hardware construction of spatial carriers to cultivating the soft power enhancement of innovation culture. And these incremental, yet profound, paradigm shifts are the key to reshaping the position and status of Chinese cities in global competition.
For every promoter and practitioner of urban innovation, any truly valuable and meaningful micro-exploration is “every inch forward brings an inch of joy.” It’s a marathon, not a sprint, and China’s cities are just starting to find their stride in this new era of global tech competition.
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